Car Manufacturing Industry in Australia

But in the last few years, Holden suffered losses due to strong Australian dollar which directed declining sales of large cars in Australia. Also government fund being reduced this has led the company to look to international markets to increase profitability. Holden announced on 11 December 2013 that production in Australia would cease by the end of 2017 (Put Reference). The car manufacturing industry in Australia provides a useful example of the way in which employment relations are shaped by a combination of global market pressures and local responses by governments, employers and unions. (Evolving Employment relations, Waring ,Bray page number 119 para.

In other words, far cheaper imports have flooded the Australian market. Indeed, local manufactures’ lack of competitiveness has resulted in falling sales volume (Whytcross, March 2014). Thus, based on the strategic trade theory, local companies like Gm Holden, Toyota, and Ford do not have a competitive advantage. Because the main idea of the theory is that trade policies can raise the level of domestic welfare in a give

The decision was influenced by many different factors as well as having knowledge that the car manufacturing industry is economically taxing. The fact that the production of cars in Australia was already in decline made a transformation possible as well as Australia’s high cost and low productivity. This can be viewed, said by Paul Bloxham who is HSBC’s Chief economist, as “globalisation” stating that Australia could obtain the same low-cost manufacturing in relation to the rest of the worlds manufacturing regions. Toyota felt that the Australian dollar was extremely high, and in this case was hindering the company’s exports from functioning sustainably, making the trades unsuccessful. As the engine and car producing company became part of the global manufacturing market, many inexpensive production expanses were located which shrank the size of the Australian industry.

With the increased supply and availability of imported cars, the demand for Australia made vehicles dropped dramatically. This decline is illustrated in the change of top selling cars in Australia. In 2002 the top three selling vehicles were produced in Australia, where as now, only the Holden Commodore ranks in the list (Biddle 2013)... ... middle of paper ... ...r the major automotive manufacturers in Australia to cease production was the consequence of a changing economic structure in Australia, which is seeing the demise of an entire manufacturing industry. Although an unfortunate outcome the role of these companies is to remain competitive and generate profit. Despite government support and constant restructuring the major manufacturers could not change consumer demand, which left the plants performing inefficiently.

The Australian automotive manufacturing industry has experienced substantial structural change (“Productivity Commission”, 2014). This has been in response to changing market and competitive conditions overseas and in Australia, and reduced levels of assistance from governments (“Productivity Commission”, 2014). Following similar decisions by Holden and Ford, these factors have led to Toyota’s decision to abandon manufacturing in Australia by 2017. AMWU National Vehicles Secretary Dave Smith said “the decision would cost thousands of jobs, not only at Toyota but all the way down the supply chain” (“Devastating day”, 2014) and represents the “collapse of the automotive industry in Australia” (Novak, 2014). The purpose of this report is to analyse and evaluate this decision by Toyota according to Shareholder and Stakeholder theories of corporate social responsibility and to identify the consequences of this decision along with responsibilities borne by Toyota, the Australian Government and the Australian Manufacturing Workers Union for these consequences.

By taking part in the global market it allows countries to specialize in their production of goods and services and give them what is referred to as the comparative advantage. This advantage enables nations to specialize in certain products which then become a major part of their Gross Domestic Produce (GDP). As the Australian car industry only makes up 0.53% of the total GDP it is only logically to conclude that for various reasons Australia is not a country that is able to s... ... middle of paper ... ...ther $200million in additional funding the car industry. Businesses (specifically the car industry), also played a part with management at an international level taking Australian government handouts whenever offered when they really had little ambition to keep the car manufacturing industry in Australia. Despite common belief, the moving of the car industry overseas is not necessarily bad for the Australian economy.

The corrupt model of trading affects the consumer tremendously who won´t pay $246,031.75 for a 2013 Toyota 4Runner anymore, because that car is sold out at official dealers; therefore, the consumer has to migrate to the second-hand car´s market at which a 2013 Toyota 4Runner price is Bs. 5,100,000.00 ($809,523.81). Internationally, $809,523.81 is enough to buy two Ferraris and even to keep the change to put gas for a couple of years.

What can Toyota Australia do as an industry leader when the whole industry is facing challenge? The whole automobile industry is facing a problem that the market is declining, especially to the main automobile manufacturers. As it was shown in exhibit 3, the market share of main automobile manufacturers, such as Toyota, Holden, Ford and Mitsubishi were all decreasing in last 14 years. Meanwhile, the market share of other brand increased from 19% to 32%. The threat of other brand, new entrants and other reasons are forcing Toyota to an unimaginable situation.

Each played their unique role in providing setbacks and reinforcement. Unfortunately the collapse of Toyota and Australian car manufacturing was a result of factors that are out of the control of these three parties. The responsibility falls on the dramatic surge of the Australian dollar making exports less profitable as the demand decreases. Similarly the competition from regions of low labor cost and high demand growth were difficult to match. With recent years Globalisation and the fragmented and in turn competitive domestic market has led to the downturn and eventual collapse of the Australian car manufacturing Industry.

However, foreign carmakers like Ford have managed to penetrate the Italian market, with vehicles like the Fiesta, by focusing on small fuel efficient cars. Furthermore, Italy faces many problems that makes it a less attractive place for business; such as “low business productivity, insufficient investment in high technology industries, disadvantageous demographics, and the labour market. (“Italy Autos Report” 31)” Although the automotive market in Italy doesn’t show much room for sales growth as shown by a high car ownership per capita. In 2009, mostly due to government incentives, the auto market saw a more moderate drop in sales than in the previous year (fig. 1).